In: Economics
Some states exclude necessities, such as food and clothing, from their sales tax. Other states do not.
•Discuss the merits of this exclusion in terms of both efficiency and equity.
•Consider North Carolina, does it exclude necessities, why or why not?
•As with all things, one decision can lead to another. Once necessities are excluded, “necessities” must be defined. Research the tax definition of “necessity” in North Carolina (or another if your state does not exclude) and evaluate it.
As per the efficiency of excluding things like clothes and food from sales tax, i would say that it is less efficent do such because it will bring up much complex structure of tax collection
Reconsidering the definition of necessities, they are actually good or services which are indeed much meeded for the better health of human.
Considering Kerala as home state
Hope this helps
please comment for doubts
thanks